The Jefferson Islands Club is an invitation-only group that owns a private, 50-acre island in Maryland — an island boasting a clubhouse, skeet shooting range, private trails and kayaks. The retreat is meant to provide “suitable surroundings and comforts where members may assemble, discuss and promote Jeffersonian philosophies,” according to the club’s website, which also says Rep. Steny Hoyer, a Maryland Democrat, is the latest in a long line of members of Congress to serve as honorary chairman.
A Siemens Corp. executive is on the Jefferson Islands Club board, according to Brie Sachse, a Siemens spokeswoman.
“Siemens takes its public disclosure obligations seriously,” Sachse said. “Siemens generally does not sponsor events that fall into this reporting requirement. While the contribution level alone did not trigger the reporting requirement, due to the board position of our executive, the contribution should have been reported, and the report has been amended accordingly.”
In other cases, companies and trade associations said they did not disclose sponsoring events involving covered public officials because lawyers determined the circumstances fall within exceptions laid out by the House and Senate disclosure guidance.
Those decisions are sometimes complex and dependent on the amount spent compared to the total cost of the event, and it’s common for companies to make diverging decisions about whether to disclose.
In November, the Independent Women’s Forum, a nonprofit whose mission is to “improve the lives of Americans by increasing the number of women who value free markets and personal liberty,” honored Kellyanne Conway, a senior adviser to the president, as “a woman of valor” who is “truly a tremendous role model for women and girls.”
The event carried a long list of sponsors, in different tiers, including the American Chemistry Council, the Motion Picture Association of America, and the Distilled Spirits Council. The only one that included its spending in federal disclosure reports was Google.
When asked by the Center for Public Integrity, the American Beverage Association initially said it would amend its reports to disclose sponsorship of the Independent Women’s Forum gala honoring Conway.
“They looked into it and determined you are absolutely right. It did need to be disclosed,” said William Dermody, a spokesman for the American Beverage Association. Dermody said the association was internally reviewing such spending to ensure it had no additional amendments before filing the new report.
More than a week later, Dermody emailed to reverse his stance, saying the trade association’s legal team “has been looking into that further and has informed me that no disclosure is required under the law for that kind of expense in our circumstances.”
“Sorry for the confusion,” he added.
More than a dozen companies did not respond to inquiries about how they disclosed participation in various events, or declined comment regarding their disclosures, including Novartis, the American Petroleum Institute and the American Chemistry Council.
Loopholes and interpretations
The rules date back to 2007, when Congress passed the Honest Leadership and Open Government Act in response to massive lobbying scandals centered around one-time super lobbyist Jack Abramoff. The act imposed a series of new disclosure and ethics requirements on lobbyists and lawmakers.
The requirement to disclose event sponsorships and contributions to charities controlled by lawmakers drew less attention than other provisions, such as new gift rules for lawmakers and a requirement that lobbyists disclose “bundled” campaign contributions.
The new contribution filings require twice-a-year disclosure of contributions to political committees from corporate PACs, as well as contributions to inaugural committees and presidential libraries and certain types of meeting expenses.
Brett Kappel, an attorney with Akerman LLP who advises clients on disclosure, said that when the law first took effect, the clerk of the House and secretary of the Senate, who track lobbying disclosure filings and make them available to the public, initially took a broad view on what had to be disclosed.
“The regulated community pushed back on that and they narrowed it,” he said.
When working with clients to find spending that has to be disclosed, Kappel said the biggest challenge is charitable contributions in response to requests that don’t go through the normal channels, such as requests made by members of Congress directly to high-level corporate officers.
Many of the disclosure reports filed contain only political contributions, the easiest type to verify against other public documents.
A careful reading of the rules shows there are plenty of ways for companies and trade associations to honor public officials, or give to their favorite charities, without triggering disclosure requirements.
Lawyers who advise companies and trade associations on the disclosures say they spend a lot of time reviewing specific facts around the events and the exact circumstances of their clients’ participation.
“I often end up looking at a lot of invitations to determine that member of Congress participated, but in what role: Were they being honored or were they just there as a member of the honorary host committee?” said William Minor, a lawyer for DLA Piper whose practice includes advising on disclosure requirements. “Those two things are different.”
Companies can give via their own charitable foundations, something Merck’s Cummins said the company did in some instances. They can buy sponsorship packages for events honoring a lawmaker or administration official that include gala tickets or tables, featured spots on signage, and other sponsor perks but still not spend enough to be considered “paying the costs of the event,” the language that would trigger the disclosure.
A spokesman for the Motion Picture Association of America pointed to this so-called “table exception” to explain why the organization did not disclose its sponsorship of the gala honoring Conway.
It’s also fine to give money to groups closely associated with lawmakers and government officials — but that aren’t “established, financed, maintained or controlled” by them — without publicly disclosing the donation.
Take the Wyoming Congressional Awards Council, which presents young people with medals to “recognize initiative, achievement and service.” The nonprofit council hosts an annual golf tournament in the tony resort region of Jackson Hole, Wyoming, and its website lists nearly two dozen blue-chip corporations as “2017 sponsors” — UPS, Chevron and Novartis among them.
Wyoming’s three members of Congress — Sens. John Barrasso, Mike Enzi and current Rep. Liz Cheney — are included on the board as “honorary chairpersons.”
The highest-tier donor packages for the event — the $25,000 “Wallop Level” package and the $20,000 “Gold Corporate Sponsor” package — include “appropriate recognition in letters to members of Congress.”
Out of the sponsors on the website, 16 lobby the federal government and are thus required to file the disclosure reports that include honorary contributions. Only two out of those 16 organizations — the Pharmaceutical Research and Manufacturers of America, a trade association, and pharmaceutical company Abbvie — elected to include information about the Wyoming event on their disclosures.
Some of the companies said they had been mistakenly included in the 2017 sponsor list, and were contacting organizers to be removed. Others, including UPS and AARP, said the event didn’t have to be disclosed because members of Congress are only honorary board members.
“The Lobbying Disclosure Act Guidance is clear that ‘A non-voting board member (e.g. honorary or ex-officio) does not control an organization for these purposes,’” a spokeswoman for UPS, Kara Ross, said in an email responding to questions.